Restaurant Brands International Inc. (QSR) Q1 2021 Earnings Report, Transcript and Summary

Good morning and welcome to the Restaurant Brands International First Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. . After today's presentation, there will be an opportunity to ask questions. . Please note this event is being recorded. I would now like to turn the conference over to Stephen Lichtner, RBI's Head of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Restaurant Brands International's earnings call for the first quarter ended March 31, 2021. As a reminder, a live broadcast of this call may be accessed through the Investor Relations webpage at investor.rbi.com, and a recording will be available for replay. José Cil: Good morning, everyone. Thank you for joining us on today's call for the first quarter of 2021. I hope everyone is doing well. On many fronts, our first quarter signaled several positive performance indicators that are so important to our long-term business and growth model. Before getting into the quarter, let me take a moment to highlight the foundational elements of our business model and then tie together the indicators that are giving us confidence that we're getting back on track as we emerge from more than a year of COVID impacts. RBI is a fully franchised global business with three amazing iconic brands. Our growth model relies on stable year-over-year comparable sales growth from our existing restaurants in addition to expanding our restaurant footprint around the world at a healthy pace. In the years leading into 2020, comparable sales averaged about 2% to 3% on a global basis, while we grew our restaurant count about 5% annually. At our Investor Day, in May 2019, we shared our aspiration of growing to 40,000 restaurants within eight to 10 years. And we remain committed to that aspiration despite a year of flat growth in 2020, because of COVID disruptions and our proactive strategic closure program. Foundational to our global growth strategy is unlocking the substantial opportunity to grow our brands in many countries where we're underpenetrated today versus our top competitors. And that we attract stable, well capitalized and experienced operators and investors in the QSR space to deliver on multi-year growth commitments in order to achieve that unlock. In fact, this is exactly what you've seen from our recent global expansion announcements in Q1 and I'll speak about that in a few minutes.

Thanks, José, and good morning, everyone. I want to take just a couple of minutes to revisit our digital strategy. A great example from the quarter and how we can learn from it strengthens targeted conversion within our marketing funnel across all of our businesses today and into the future. If you imagine the non-digital guest experience for a moment, we rely on a powerful, recognizable brand and memorable advertising to attract you to our restaurants. We focus on a few famous core products that are differentiated from our competitors. We entice our guests with visual menu boards and point of purchase materials at the restaurant that highlight deals we think our guests will value. We focus on providing a positive interaction with our team members, and serving you hot, delicious food in a timely and accurate way. And we do panel studies, one-on-one interviews and samples of guest feedback to understand how our guests react to the experience we offer, and then use that data to make adjustments for the next time they come in. Now, I'm simplifying it a bit, but not that much. That was how our industry operated for a long-time before the power of fully integrated digital experiences, combined with leveraging technology and data has begun to change the way that we and others manage our business. The foundation of our digital and technology strategy is our guest. We want to be part of the smartphone in their hand and be one of the apps that they returned too frequently. This is an important point. We've spent decades to develop and protect our iconic brands. We want to design every step of the guest journey with our brand. And we can best do that on our digital platforms. In our own applications, whether on desktop, mobile, kiosk, digital menu boards or any device where we interact with our guests. We are building our apps and our associated digital loyalty programs to be highly engaging, and a reason to visit our brands more frequently, driving lifetime value of our guests' relationships and deepening connections with our own brands. A great example from this quarter that we believe is a guide for the future is the Roll Up to win experience that Jose mentioned earlier. We took something historical, iconic and unique to our Tim Hortons brand, and brought it into the modern digital world in a caring and highly guest focused way. Through that transition, we were able to bring a very large group of our Tims guests, a lot closer by creating a new digital relationship. But we also drove engagement with existing guests spending more time on the app, something we plan to sustain with games, contests, and more reasons to use the Tim Hortons digital ecosystem in the future. Ultimately, this deepening of our guests engagement is allowing us to better understand our guests and drive sales through more personalized offers. That is to say we are using better offers in addressing a larger portion of our guest base. And it means that our digital platforms are having a more relevant impact to our business than ever before. José mentioned that we are deploying loyalty programs at Burger King and Popeyes as well, which will help to reinforce the already large and growing number of guests engaged on our digital platforms at those brands. Fundamentally what this allows us to do is work very differently and much more efficiently with our marketing funnels across our businesses. Many of the members of our rewards or loyalty programs tend to be some of our most loyal fans. And we can now personalize the offers and messaging that they receive to improve their experience and offer suggestions for other dayparts or menu items that they might like to try. We have also leveraged these channels to communicate about purpose-driven messages that are important to our guests, like Tims For Good, or our recent Popeyes quality campaign bringing even greater visibility to the great work our brands do, at little to no media cost. This is a much more efficient way of marketing to our guests, and we're excited about the path ahead of us. Alongside loyalty, we've discussed significantly expanding our outdoor digital menu board footprint, with plans to have over 10,000 drive-thrus equipped by mid-2022. It's exciting to see the menu boards installed so far, producing a quantifiable uplift in sales even while we were early in rolling out and optimizing our predictive selling capability, and fully integrating our loyalty programs. With that in mind, we continue to work closely with our franchisees to roll the boards out across the system as quickly as possible, while our engineers and product teams continue to improve the software capabilities. I'll stop there for now and pass the call over to Matt to cover financial results.

Thanks, Josh, and thanks everyone for joining us this morning. While we're still working through COVID-related headwinds in various parts of the world, as José mentioned, we've seen solid underlying progress against our plans in many areas of the business. When we look at our consolidated results, we see the benefit of our global scale and diversification across three great brands and a differentiated set of partners around the world who remain focused on growing their businesses. As a result, our global system-wide sales for the quarter were up 1.4% and our adjusted EBITDA was up over 5% organically year-over-year. The undergrowth in system-wide sales, I would call out two other factors contributing to our growth in adjusted EBITDA. First, while we haven't historically had meaningful bad debt expenses, we did increase our bad debt provision in 2020 to reflect an increased risk environment. As sales and unit level profitability have now largely rebounded, we're seeing some release of cautionary provisions which accounted for about one and a half points of our year-over-year growth. Additionally, our Tim Hortons retail business in particular has performed very well throughout the lockdown environment, as a result of market share gains, new product listings with some of our largest partners, expansion into new markets in the U.S. and adding points of distribution. Overall, our growth in retail also added about one and a half points to our year-over-year growth in adjusted EBITDA. Next, we wanted to provide a quick update on G&A. During our last call I mentioned that we expect to continue making proactive investments in digital and technology initiatives, as well as adding hires across a number of key areas, all leading to sizeable year-over-year increase in G&A. When looking at the first quarter, and adjusting for timing and one-off expenses last year, our segment G&A was up slightly year-over-year consistent with Q4. However, as we look forward, we expect these investments to increase over the course of the year as we ramp-up our various initiatives. And as José mentioned earlier, we also recently announced CAD$80 million of support behind the Tim Hortons marketing program in Canada. This, along with other advertising expenses will flow through a newly separated line item in our P&L added as part of an effort to enhance disclosure around advertising expenses, revenues, and core segment G&A. We hope this enhanced disclosure makes things easier for everyone to understand going forward. Now turning to EPS. Our first quarter adjusted earnings per share of $0.55 grew at a higher rate than our consolidated adjusted EBITDA at about 15% year-over-year, including an FX benefit of about 2%. The higher growth was further supported by a lower effective tax rate, mainly as a result of stock-based compensation realized during the quarter and a lower share count following our $380 million share repurchase last year. These tailwinds were slightly offset by higher stock-based compensation and D&A. José talked quite a bit about the underlying progress and opportunities that are driving our positive outlook on the business. And along with that, we're moving forward on our key capital projects, including investing behind remodels and rolling out outdoor digital menu boards across the Tim Hortons system, both of which we expect to ramp up as the year progresses. From a capital structure perspective, we ended the quarter with slightly lower net leverage relative to the end of 2020 now at 6x. While net leverage may seem high relative to other industries, we're very comfortable with our position for a number of reasons. First, our liquidity position is solid between our $1.6 billion of cash on hand and our undrawn revolver, we have about $2.6 billion available. We also have no upcoming maturities until 2024 and approximately 80% of our capital structure is fixed at attractive rates as a result of the refinancing work we've done over the last few years. And most importantly, as José mentioned earlier, our business model as a franchisor is very efficient, and our high conversion of earnings to cash flow provides plenty of capacity to cover our debt service obligations multiple times over. And finally to wrap things up, I'm pleased to share that we declared a dividend of $0.53 per common sharing unit, payable on July 7, 2021, which extends our industry-leading dividend consistent with our previously announced target of $2.12 for 2021. With that, I'd like to thank everyone again for your support. And we'll now open the line for questions. Operator?

We will now begin the question-and-answer session. . The first question comes from Jon Tower with Wells Fargo. Please go ahead.

Great, thanks for taking the question. Lots to dig through today and congrats on the progress. I'm just curious; perhaps you could dig into the incremental ad fund contribution that you've made or plan to make in Tim Hortons Canada? Can you discuss how you plan to utilize the incremental spending or the incremental dollars, particularly given that right now you've got a challenged environment in Canada, as you alluded to earlier today in the conversation, and where we should expect to seeing that show up whether it's in digital channels, more traditional media or is it going to be a promotional activity and particularly the timing, can this bleed over into 2022 given the challenges that are facing the Canadian mobility at the moment? Thank you. José Cil: Hey, Jon, thanks for the question. Look, as I mentioned during the prepared remarks, we feel encouraged by the progress we're making at Tims encouraged by the first quarter. Obviously, the situation is different in Canada as it is in the U.S. and some other markets around the globe. But we've been focused on our Back to Basics planning and are making good progress on those initiatives around the quality of our food, expanding the menu, keeping it to what we're really good at and what made Tims famous, modernizing the restaurant experience with our rewards program as well as investments in the drive-thru. And what this investment means is that we as a -- as a company, as a Tims team, as well as our owners, have confidence in the plan, confidence in the team, and feel as it's really important to invest now in the business, invest in it behind these initiatives to be able to be in a position once mobility returns, the vaccine reaches higher levels of rollout. And things start opening up again, as we've seen here in the U.S., we have confidence that we're going to be well positioned to capture that that growth and that return to normalcy, if you will, that that will come to Canada. The timing of it is really a function of how much we believe in and the plan and the partnership that we have with our owners and the opportunity that exists in Canada. And how we'll use it will depend, we've got flexibility, obviously, we think that it's going to be investment behind initiatives that are driving our core platforms and the digital experience as well. Overall, we want to be able to bring higher levels of awareness and also just continue to drive our brand love initiatives in Canada and bring more firepower to the advertising budget to be able to get the message out to Canadians in the coming quarters.

Yes, hi, Jon. Yes, just one quick thing I would add there in timing. I think we'd expect, the investments here, as José mentioned to be fluid, it probably fluctuate a bit as we progress throughout the year. But we do expect to invest the entire $80 million Canadian support this year. Thanks for the question.

The next question comes from David Palmer with Evercore ISI. Please go ahead.

Thanks and thanks for the discussion as well, particularly on Tims. I heard some comments in there about two-year breakfast comp that you mentioned being positive. And I think you said down the break -- I think it was breakfast food comp was positive and that breakfast daypart was down low-single-digits lately. Perhaps you can go over those numbers again, and perhaps what that means for how you're doing overall for Tims on a two-year basis lately. I think that's going to be important for people to get a sense of? And I -- and really just a big discussion. I know you're not going to get too much into guidance. But we look back at 2019 as the base year that was kind of a rough year for Tims, we had the loyalty issues and the drag, then in 2020 was supposed to be a little bit of a rebuild year anyway. So it's interesting that the Street numbers for 2022 are still below that, in terms of same-store sales, below that level of 2019. So it seems conservative when you think about it. Do you agree that that you should be higher in sales per unit in 2022 if Canada has reopened? And I'll pass it on? Thanks. José Cil: Thanks, David. On the second question, we don't -- I'm not going to get into that. And we're focused on executing our plan now. And as I mentioned, we're excited about the progress we're making, still have a lot of work to do. And there's obviously macro conditions in Canada in particular that that we're still working through, but the plan is working as intended. And we're making good progress on all fronts, product quality, improvements in coffee, with a Dark Roast as well as the fresh brewers that we rolled out, progress with the -- with breakfast food in particular, that was one of the key priorities I mentioned a couple of times over, probably over the last 12 months, the importance of us moving into top consideration for breakfast visitation, when food is the driving motivator. And so we certainly at the top of the list when coffee is the motivator. And I think we're getting better at that. But in addition to that, when food is driving the decision for our customers in Canada, we needed to move up that list and food quality was critical. Freshly cracked egg was a big, big initiative for us, it's taken us over a couple, it's two years plus in the making, and a very strong partnership with our restaurant owners in Canada to get that in place as well as great work from the team in Tims in Canada from an operational standpoint, from a supply chain standpoint, as well as from a marketing and product innovation standpoint. The numbers I mentioned or the progress that I mentioned is that we launched Freshly Cracked Eggs at the -- sometime at the beginning of February and by the end of February, we saw our breakfast food category. So the food side of the business breakfast, delivering a positive year-over-year, and two-year comp growth. So that was encouraging that's early days in the launch of that product, and really enhancements of quality in our breakfast offering driving growth in the food category. And then we also saw positive year-over-year growth in the overall morning daypart, the last few weeks of March. So it wasn't for the full month, it's the full quarter. But for the last few weeks of March, we saw progress on a year-over-year basis. We're still negative on a two-year basis in the daypart, but it was low-single-digits at the end of March which again, it just highlights that we're in the early days for using baseball as an analogy, early innings of the game here but we're working hard with our teams and our franchise owners in Canada to make real progress here. So thanks so much for the question. We'll go to the next one.

The next question comes from Dennis Geiger with UBS. Please go ahead.

Great. Thanks. And José thanks for the color and all the insights across brands, definitely helpful. I wanted to ask a bit more about Burger King U.S., so you highlighted a number of compelling initiatives across chicken, breakfast, digital with a focus on quality and experience. It seems like, wanted to ask how quickly you think a lot of these initiatives can start to drive market share gains from here. And kind of related to that, we've seen a little bit of uneven performance, certainly over the last several years from the brand in the U.S. with LTOs and promotions working well, but it's probably difficult to have really good year-in, year-in consistency with that. So curious now as you highlight a lot of these strategic points of focus, if this can drive sort of greater annual consistency and momentum for the brand going forward, if that's a part of kind of the roadmap that you outline there? JoséCil: Hey, Dennis, thanks for the question. Yes, on the second point the idea here is definitely to build a long-term plan. We've made some meaningful changes to the team in the U.S., the marketing team, we feel really good about the talent that we have in the team and the progress they're making in terms of planning and the work they're doing collaboratively with the franchise owners in the U.S., which is helping us build a solid plan that we all believe in, and then everyone's executing behind. So there's confidence there in the plan, long-term plan and our commitment is to build something meaningful that drives sustainable growth over the long haul. I think in the short-term, which is your first question, the progress that we're making and the excitement that I shared in my prepared remarks is that the first quarter was a good quarter in terms of nominal monthly sales per restaurant; we saw really good improvements on that front. We're reaching highest levels we've seen in recent history. A big part of the progress we made in the quarter was the implementation, and then the full-quarter execution of the dollar value menu. And we think it's helping us close gaps in terms of visitation. And we saw some really good progress on that front year-over-year as well as versus the industry. But we're also, it's a balanced approach. And you've heard me say that multiple times over the years, the importance of with Burger King in particular is having a balanced approach, obviously driving our core, but having a balance with premium offerings as well as value. And so the quarter was encouraging in that regard, we made some good progress as well. In digital, I think there's a lot more to come there with the BK team, and we're excited about the launch of Digital Loyalty, which over time will be available in other channels and service modes. And we've got, I think this quarter also reflected the move back into innovation, meaningful innovation, we saw the work on the breakfast, French Toast Sandwich, as well as Cheesy Tops that came back. And those are popular, limited time offers that we've had in the past. And so bringing it back for our customers was quite impactful. Also the work we've done on hand-breaded chicken sandwich, which I mentioned in my prepared remarks is coming to a location near all of you very soon. This is an important launch for us. We've had chicken for a long time. This is not a new category for us, but it's a massively improved offering, and I think will be really exciting for our business long-term. The franchisees are excited, they're executing it well. And we're being deliberate in terms of the rollout because of the importance of building something sustainable long-term. So you'll see a shift at Burger King from trying to do promotional activations short-term to drive visits and transactions, that high low approach, I think you'll see us build a sustainable, long-term plan on meaningful platforms. And that's why I mentioned the breakfast, the importance of breakfast, how strategic -- strategic it is for our business, and the investments we're making behind it long-term to make a meaningful push on that over time. So we're excited about where we are, the progress we've made but it's early days, and we've got a long, long way to go. So we'll keep you posted on our progress. Thanks, Dennis.

The next question comes from John Glass with Morgan Stanley. Please go ahead.

Thanks and good morning. Coming back to Tims in two unrelated pieces. One just on digital in the past, you've talked about the contribution of digital was negative, it's clipped a positive, maybe just some insights as to how that's progressed, and the contribution of the comps. And inside that 30% of digital customers or transactions you're experiencing, what are the dynamics are you seeing those customers frequent more and if so how much? And if it's a checklist, because they're buying up and you're the bespoke offers, what is that checklist? That's on the Tims Canada business. If we just flipped over the other side of the world, Tims China seems to be getting some momentum and unit growth and just obviously some excitement from external investors. Can you just remind us how the brand is positioned differently there that makes this resonate? If there's any metrics around sales volumes that you can share, so we can just better understand how that opportunity is shaping up? José Cil: Yes, thanks, John. I'll have Josh touch on the digital question related to Tims in Canada, and then I'll come back to Tims China. Josh?

Yes, good morning, John. Thanks for the questions on Tims. I would say, directly on the Tims Loyalty Program, what we have seen is that like that, over time, the contribution to this sales has been more positive. We've been consistently working on that, as we've been able to make the offers more targeted. And the teams done, I think a great job of, as I mentioned in the remarks, both consistently growing the base of those loyalty users getting them to be more registered, and then making those offers more targeted, which is kind of over time, allowing the program to be more and more effective. And then I'd say as you asked the question about, what are we doing with the program? Are we growing check or are we driving more frequency? One of the big things that that I referenced in some of our remarks earlier and that we're really focused on that, I think is probably the biggest part of what we're trying to do is driving more engagement with the app. And I think that drives more engagement with the brand and I think that a lot of that's around frequency. So you've seen us doing a lot of different things like the Roll Up to Win kind of digitization of an existing Roll Up the Rim game that's driving people to come back to the apps more often to play more games and we can actually see in the segmentation of our guests, that a lot of the guests are coming back. And they're engaging with us more and more frequently. And I think our goal is to see the guests engage with the Tim Hortons brand more often, and come back and visit us more often drive more frequency and engagement over time. So those are some of the biggest things that we've really been focused on where we think we're making progress, and where we think we can do even more over time. José Cil: Thanks, Josh. John, on the question of Tims China, as I mentioned in the prepared remarks, we're really excited about the progress there. We're only two years into it. So we started, we built our first restaurant, opened the first restaurant at the beginning or Q1 of 2019. And we're at about 200 locations now; we've had very, very cutting interest from important investors in China on the business. And we have commitments to double the size of the businesses here and continue on our journey to reach the targets of growth that we set for the business as a starting point, when we announced the partnership back in 2019, or at the end of 2018. We're not -- we're not sharing details on AVs and these sorts of things for that business. But the progress has been tremendous, we're positioning for the brand there. Interestingly enough, the Chinese consumer connects well with the Canadian brand, not Tims necessarily but Tims Canada as a broader concept. Obviously, things like hockey players aren't going to be highly relevant in China, but there's a lot more to Canada than hockey players, and so and to the brand as well. So we've been able to build on those, we've done a bunch of research with Chinese consumers and the things that that really resonate are the quality of the product, the quality of the digital experience, the design elements that we've built, that are really modern and forward-looking and very cool and connecting well with our customers and convenience being there every day for every transaction with high-levels of services. Local team in China is doing an awesome job with Tims and I think it's a really good example, it's a micro example of what can be the possibilities with Tims internationally, we've seen good progress with our business in the UK. We have a really strong business in the Middle East, Saudi Arabia with Tims and we think we have tremendous opportunity for growth long-term with the Tims brand as a great offering for coffee, for breakfast, for baked goods and doing it with a digital forward game plan. So we're excited about the progress, but it's early days and given the nature of coffee growth in China, we think we're well positioned to see a long-term growth of the business there for years to come. Thanks for the question.

The next question comes from Chris excuse me Carril with RBC Capital Markets. Please go ahead.

Hi, good morning. Thanks for taking the question. So on the back of the recently announced development agreements for Popeyes, how should we think about where the brand as long its growth trajectory both in the U.S. and globally? And if you could maybe to help us better understand this trajectory; can you maybe frame up how you're thinking about the brand, relative to how you thought about Burger King ahead of its development ramp a few years back? Thanks. José Cil: Hey, Chris, thanks for the question. I think it's important to go back to 2019 when we shared our ambition to reach 40,000 restaurants in over an eight to 10-year window. We thought that and still think now that we have an incredible amount of open space around the world to build our three brands and our franchisees new ones and existing ones are super excited about the business and especially given the power of the brands and the resilience of the business in the most difficult circumstances. So the unit economics and the performance of the business journey, probably the most complicated environment anyone's ever seen gives them confidence that this business is really solid, and can create a ton of value for them over time. One of the things that I think is important from our development journey is, we've talked about and obviously DK has been a big part of our growth internationally for the last several years, we doubled the size of our international business from 2012 to 2020. We went from something like just under 6,000 international restaurants to over 11,000 excluding the U.S. business. So there was a tremendous amount of growth internationally, we doubled during that stretch of time. That was, because of the benefit of the great partners we had internationally in the master franchise and joint venture agreements we put in place. But the reality is we still have a ton of room for growth in many of the markets where we made a ground versus our competitors over the last eight years. China, France, Spain, U.K., Germany, Brazil, these are markets where we've seen tremendous growth, but we still have big opportunities for growth going forward. And we have great partners and great teams there to achieve that. As it relates to Tims and Popeyes, it's even -- I think it's even earlier days, and then Burger King, obviously. But the kind of the experience we've had with our master franchisees, and the approach we've taken to the double the size of the business internationally for BK over the last eight years, is similar in how we're thinking about Tims and Popeyes. And Popeyes obviously, with the momentum of the Chicken Sandwich and the momentum of the business in the U.S. has learned a lot of excitement and interest internationally. And it's led to important partnerships in the UK, in India, in Mexico, in Saudi, and we think it's just the beginning of the potential this brand has internationally. There's a lot of work here, we're not trying to meet our short-term goal here. We're trying to build something meaningful for the long-term, and the selection of partners, ensuring we have the right teams in place with the right incentives and the right capital structure. That's what's driving us. And that's what drives the process. And we look forward to seeing our business grow, and our brands grow internationally in the years to come.

The next question comes from Nicole Miller with Piper Sandler. Please go ahead.

Thank you. Good morning. I was helping to understand consumer behavior and the digital impact through the lens of average checker transaction. So could you please share where you landed last year by concept on the dollar amount, average check or transaction? And then at each brand, how is it trending higher or lower the same as you enter the year and why? Thank you. José Cil: Thanks, Nicole. In general, we don't really breakout traffic and an average check performance for our brands in home markets or internationally. Obviously, what the impact in the last 12 months of COVID on mobility and transactions we've seen in people, more -- more people dining through off-premise channels, delivery as well as drive-thrus, we've seen check growth across the globe. As I mentioned in my remarks in earlier on BK, we've made good progress with transaction growth in the first quarter here in the U.S. with our focus on the dollar value menu. I think there's -- probably there is a digital aspect of that question as well. I'll ask Josh to maybe comment on it by brand.

Nicole, I know you heard a couple of thoughts just generally, on this topic. The couple of things that we do see between, they're a little bit different between some of our digital and non-digital channels. I would say at a high-level that we tend to see that our digitally engaged guests. Even with in-store service modes, they tend to be some of as I mentioned in my March earlier, they tend to be some of our more loyal guests, some of our bigger fans. So they tend to be a little bit more a little bit higher frequency guests, so they tend to see them coming in a bit more often. And then obviously, the check profiles a little bit different based on the service mode, but any of our delivery service mode guests are obviously a much higher check profile. So those are the two things that I would probably point out to you in terms of different check and transaction dynamics between the channels. José Cil: Thanks for the question.

And the last question today will come from Patricia Baker with Deutsche Bank. Please go ahead.

Thank you very much and good morning, everyone. I just want to return to the discussion of the Tims practice. Thank you for sharing what you have shared with us. And it's great to see that that has traction. It may be early, but I'm just curious what you know about that customer? Is the person buying the cracked egg sandwich? Are they replacing other breakfast offers? Or you may be seeing returning customers that may have lacked on breakfast for you? And do you have any evidence that you're gaining some new customers having this particular offer? José Cil: Hi, Patricia, thanks for the question. It's early days with the launch of fresh cracked eggs. The data or the update that I shared was the information we had at this point with the -- which is encouraging with the progress we're making. I think we've seen higher frequency through our digital channels of loyal guests that that are coming back and adding a chicken sandwich I'm sorry chicken sandwich. I always have that in my mind. But a breakfast sandwich at Tims maybe eventually a breakfast sandwich with chicken as well. But anyhow, we've seen our digital data and loyalty data confirm that we're seeing we have higher frequency from loyal guests coming in and adding a breakfast sandwich. So we think there's new customers coming in early days. And we're seeing more frequency from existing customers. And that gives us confidence and encouragement that we were on the right path in terms of developing a really high quality offering for breakfast at Tims. It's really just the beginning of the journey. We've started to add the fresh cracked egg to bagels, and we think there's other opportunities as well to introduce that in another product. So we're excited about the progress, excited about the start with it and looking forward to continuing to drive more customers into Tims for breakfast and for other dayparts as well. Thanks so much for the question.

This concludes our question-and-answer session. I'd like to turn the conference back over to José Cil for any closing remarks. José Cil: Thanks to everyone for their questions and for joining us this morning. We're pleased to see the business return to growth and to see such a strong start to the year from a development standpoint, as we get our unit growth engine back up and running. On top of that, our digital efforts are beginning to produce impressive results as we discussed highlighted by what we saw from the Tims Roll Up to Win contest. With loyalty programs at all three brands, at all three of our brands and home markets, we're excited to build a more personalized experience for our guests while delivering them high quality craveable foods at a compelling price. Our teams here at RBI and our franchise partners around the world are working hard to continue building on the progress we've made so far and I look forward to sharing more in the next quarters to come. Have a great day and stay safe out there. Thanks everyone.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.